China’s Monetary Policy Is `Too Tight,’ Bankers Say

Chinese bankers say monetary policy is too tight and their expectations for interest rates to rise have eased, a central bank survey showed.

Policy is “tight” or “too tight,” according to about two-thirds of 2,900 heads of financial institutions surveyed by the People’s Bank of China this quarter. The results, published on the central bank’s Web site today, didn’t give more detail on reduced expectations for a rate increase next quarter.

China’s central bank this month ordered lenders to set aside a record proportion of their deposits as reserves, seeking to cool inflation as energy and raw-material costs surge. It has kept rates on hold in 2008, after six increases last year, to avoid attracting money from abroad that may stoke price gains in the world’s fourth-largest economy.